British Regulator to Examine Competition in Investment Banking

LONDON — The Financial Conduct Authority of Britain said on Thursday that it planned to review whether competition was working properly in the corporate and investment banking sectors.

The regulator conducted a similar review of so-called wholesale securities and investment markets last year, and plans to consider looking at the asset management sector this year.

The examination of competition in the wholesale financial markets found that limited clarity on the price and quality of services could make it difficult for clients to determine whether they were getting value for their money, and that cross-selling of services could make it difficult for new entrants or smaller firms to challenge existing players. The authority released a summary of its findings this month.

“The U.K. is a global hub for investment banking, and this sector plays a crucial role in our economy, helping companies raise capital for investment, expansion and funding ongoing operations,” Christopher Woolard, director of strategy and competition at the Financial Conduct Authority, said in a news release. “What was clear from the discussions we had with stakeholders and firms was that there are unanswered questions about potential conflicts of interest and value for money in this market.”

The regulator said it intended to seek information for the banking study from inside the industry, trade groups and clients.

The feedback received by the agency so far includes concerns about transparency, conflicts of interest and the impact of bundling services on competition, particularly on the ability of new firms to enter the market, the regulator said.

The Financial Conduct Authority oversees conduct in the financial industry in Britain and will broaden its remit this year to breaches of competition law, with more authority to make referrals to the Competition and Markets Authority of Britain for investigations.